It pays to take the long view on finances

Ron Carson, Special to CNBC.com

Monday, 24 Feb 2014 | 8:00 AM ETCNBC.com

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At just a little less than two months into the new year, some have already abandoned their resolutions, while others are still working hard to achieve their goals for 2014—whether it be health, fitness, career, personal or financial.

Among those who are setting resolutions based on achieving financial objectives, many will consider increasing their savings account, spending less and investing more. So when it comes to the market, what should investors prepare for in 2014?

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Before we share our opinions on the financial world in 2014, let's take a quick step back and make sure we're keeping everything in proper perspective. A good financial advisor should always put less emphasis on what will happen over the course of a short time period and instead focus on achieving long-term goals that were created during a thorough planning process.

We were recently reminded by our friend, behavioral finance consultant Dr. Daniel Crosby, that planning done by advisors has added 2.92 percent alpha, net of fees, over those investors who don't follow a long-term plan. By setting a long-term plan, we can avoid getting whipsawed by volatile markets and making foolish decisions when emotions are running high.

In fact, studies also show that we lose 13 percent of our IQ while under stress.

Although my team has years of experience with forecasting the outcome of the market and analyzing trends, it's important to plan for your unique, individual situation.

So while many will look to stick to their financial resolutions in 2014, those goals will vary person to person, so consult your financial advisor to help you create a customized plan based on your unique goals and objectives. The markets change, which is why I believe it's so important to provide investors with up-to-date and relevant communications.

"By setting a long-term plan, we can avoid getting whipsawed by volatile markets and making foolish decisions when emotions are running high."

Each quarter, the investment committee at my wealth management firm, Carson Wealth Management Group, and I film a market-update video that we share with our clients. We summarize what happened over the previous quarter and discuss trends and predictions for the upcoming quarter. Anyone interested in viewing our previous market-outlook videos or our upcoming market-outlook videos as they become available can do so online at www.carsonwealthmg.com/p/videos.

After consulting with my investment committee, we collectively believe that 2014 is on track to be both the "year of the taper" as well as the "year of the dove." If the economy continues to improve, we will absolutely see additional tapering. However, it is important to understand the difference between tapering asset purchases and interest rates.

While the Federal Reserve has already started to reduce its monthly asset-purchase program, it also reaffirmed its commitment, following the latest meeting, to keep short-term interest rates low until employment shows considerable improvement. Therefore, the Federal Reserve will remain "dovish" with the interest-rate policy until the economy significantly improves.

Byron Wien, Blackstone Advisory Partners vice chairman, provides a bullish outlook on the U.S. economy. "I think we'll have 3 percent growth, there will be continued share buybacks and profits will improve," he said.

The Federal Reserve is cognizant of how its policies impact the financial markets. At the same time, its mandate is to help optimize economic growth and unemployment while managing inflation to its desired target rate of 2 percent. We believe its policies have helped the economy improve and will continue to accommodate the economy until we have already achieved "escape velocity."

Therefore, we believe the Federal Reserve will gracefully adjust its monetary policy in accordance with the economy. If the economy begins to show signs of losing strength, we would expect the Federal Reserve to act swiftly and install some form of policy that would assist the economy in combating whatever weakness presents itself.

Basic economics would lead us to believe that as the economy continues to grow at a quicker pace, interest rates will rise and fixed-income investments will move in the opposite direction. Whether or not "havoc" is wreaked on the market will depend on issues outside of the Federal Reserve policy, in our opinion.

Furthermore, we feel that historically, an improving economy has typically been kind to stock investors.

Now that the festivities are long over and the champagne glasses all put away, I encourage you to look ahead and do your best to stick to your financial resolutions in 2014 instead of watching the clock tick down to the end of another year.

—By Ron Carson, Special to CNBC.com. Ron Carson is founder and chief executive of Carson Wealth Management Group. A certified financial planner with more than 20 years' experience, Carson authored "Tested in the Trenches" and co-authored The New York Times best-seller "Avalanche: The 9 Principles for Uncovering True Wealth."